Corporate Sustainability Reporting Directive (CS…

Is my company still in scope of CSRD after Stop-the-Clock and Omnibus — and from which financial year must we report?

Public-interest entities with more than 500 employees still report from financial year 2024; for other undertakings, Stop-the-Clock shifted CSRD reporting to financial years 2027/2028 and Omnibus I limits the scope to undertakings with more than 1,000 employees and more than EUR 450 million net turnover [32022L2464; 32025L0794; 32026L0470].

Short Answer

The CSRD (Directive (EU) 2022/2464) amends the Accounting Directive 2013/34/EU and requires in-scope undertakings to disclose sustainability information in a dedicated section of their management report, prepared under European Sustainability Reporting Standards (ESRS) [Art. 19a(4) as amended]. Two subsequent acts have materially changed the application dates and scope: the Stop-the-Clock Directive (EU) 2025/794 of 14 April 2025 postpones the application for undertakings originally caught from financial year 2025 (Wave 2) and financial year 2026 (Wave 3) by two years, to financial years starting on or after 1 January 2027 and 1 January 2028 respectively. Omnibus I, Directive (EU) 2026/470 of 24 February 2026, narrows the scope to undertakings with more than 1,000 employees and more than EUR 450 million net turnover. The double materiality assessment, limited assurance requirement and ESEF/XHTML tagging obligations remain unchanged [Art. 19a(1)-(2), Art. 34(1)(aa) as amended].

Who is affected

Wave 1 — unchanged: large public-interest entities with more than 500 employees report from financial year 2024 [Art. 5(2)(a)]. Waves 2 and 3 — postponed by Stop-the-Clock: other large undertakings and parent undertakings of large groups from financial year 2027 (previously 2025); listed SMEs other than micro-undertakings, small and non-complex credit institutions and captive (re)insurers from financial year 2028 (previously 2026) [Art. 5(2) as amended by (EU) 2025/794 Art. 1]. Scope under Omnibus I: only undertakings with more than 1,000 employees and more than EUR 450 million net turnover fall within CSRD obligations going forward [Art. 19a, Art. 29a as amended by (EU) 2026/470 Art. 1]; Member States transpose Omnibus I by 26 July 2028 at the latest. The original Accounting Directive thresholds of 250 employees, EUR 50 million net turnover and EUR 25 million balance sheet total [Art. 3(4) Directive 2013/34/EU] are superseded by Omnibus I for the CSRD obligation. Third-country undertakings with net turnover of more than EUR 450 million in the Union (previously EUR 150 million) and an EU subsidiary or branch with net turnover of more than EUR 200 million, from financial year 2028 [Art. 40a as amended].

Deadline

Next concrete deadline after Stop-the-Clock: for Wave 2 undertakings originally caught from financial year 2025, the first reporting cycle now starts with financial years beginning on or after 1 January 2027 — first reports thus form part of the 2027 management report, published in 2028 [Art. 5(2) as amended by (EU) 2025/794 Art. 1]. Wave 3 (listed SMEs, small and non-complex credit institutions, captive insurers) follows from financial year 2028. Member States adopt and publish the Omnibus I transposition by 26 July 2028 at the latest [Art. 5 (EU) 2026/470].

Risk

The Directive does not fix a Union-wide penalty amount. Instead, Member States must lay down effective, proportionate and dissuasive penalties for non-compliance [Art. 51 Directive 2013/34/EU, referenced in Art. 1]. Members of the administrative, management and supervisory bodies bear collective responsibility for ensuring the sustainability report is prepared and published, acting within their national-law competences [Art. 33(1) Directive 2013/34/EU as replaced by Art. 1(11) Directive (EU) 2022/2464, Art. 40c]. Concrete liability consequences are determined by Member State law. For listed companies, national securities supervisors enforce compliance under Directive 2004/109/EC [Art. 2 of this Directive]. Practical risk: an absent or non-compliant sustainability report blocks the assurance opinion, triggers supervisory action and can impair access to capital markets and ESG-linked financing.

Proof

Legal status

• In force
• as of 2026-05-12
• Original version of Directive (EU) 2022/2464, materially amended by Stop-the-Clock Directive (EU) 2025/794 of 14 April 2025 and Omnibus I Directive (EU) 2026/470 of 24 February 2026.

Primary sources

• EUR-Lex — Full text of the CSRD
• EFRAG — European Financial Reporting Advisory Group — Technical advisor for ESRS, binding interpretive guidance
• European Commission — Corporate sustainability reporting — Commission policy hub on CSRD implementation

What to do now

Legal / DPO

•Map the scope cascade in Art. 5(2) to every group entity — confirm which wave each subsidiary falls into (FY 2024 / 2025 / 2026 / 2028) and whether the subsidiary exemption under Art. 19a(9) as amended applies when the parent reports at group level.
•Review board mandates and delegation frameworks to ensure collective responsibility for sustainability reporting under Art. 33 as amended and Art. 40c is explicitly assigned, documented and insured.
•Draft or update the due diligence disclosure framework required under Art. 19a(2)(f) as amended, aligning with the UN Guiding Principles and OECD Due Diligence Guidance as referenced in Recital 31.

Compliance

•Establish a double materiality assessment process covering both impact materiality and financial materiality for all ESRS topics, as required by Art. 19a(1)-(2) as amended and Recital 29.
•Set up an internal data collection pipeline for value chain information — Art. 19a(3) as amended grants a 3-year transitional relief for unavailable value chain data, but requires disclosure of efforts made and plans to close gaps.
•Coordinate with the audit committee on its expanded mandate for sustainability reporting under Art. 39(6) of Directive 2006/43/EC as amended (Art. 3 of this Directive), including monitoring of the assurance engagement.

IT / Security

•Implement XHTML/iXBRL tagging infrastructure for the sustainability section of the management report in ESEF format as required by Art. 19d as amended, ensuring machine-readable digital taxonomy alignment.
•Build data governance controls for ESG metrics (Scope 1-3 emissions, gender pay gap, biodiversity KPIs) — the information must be forward-looking and retrospective, qualitative and quantitative [Art. 19a(2)(a)-(h) as amended].
•Ensure that the IT systems supporting sustainability data collection enforce audit-trail integrity, since the statutory auditor or independent assurance services provider must verify the data under Art. 34(1)(aa) as amended.

Product / Engineering

•Integrate Taxonomy Regulation (EU) 2020/852 Art. 8 disclosures into the sustainability report — CapEx/OpEx alignment percentages for taxonomy-eligible activities must be reported alongside the ESRS data [Art. 19a(2)(a)(iii) as amended, Recital 30].
•Prepare product-level sustainability data feeds (energy consumption, circular economy metrics, supply chain due diligence) so that the ESRS cross-cutting and topical standards can be populated from operational systems rather than manual surveys.
•Design a stakeholder engagement mechanism for workers and their representatives as required by Art. 19a(5) as amended — product teams must provide data on working conditions, health and safety, and skills development across operations.

Key Terms

Sustainability matters: Environmental, social and human rights, and governance factors, including sustainability factors as defined in Article 2(24) of Regulation (EU) 2019/2088 (SFDR) [Art. 2(17) as amended].
Double materiality: The principle that undertakings must assess both the impact of sustainability matters on their financial position (financial materiality) and their own impact on people and the environment (impact materiality) [Recital 29].
European Sustainability Reporting Standards (ESRS): Mandatory reporting standards adopted by the Commission via delegated acts under Art. 29b as amended, developed with technical advice from EFRAG, specifying cross-cutting, topical and sector-specific disclosure requirements.
Limited assurance engagement: An assurance engagement in which the practitioner performs fewer procedures than in a reasonable assurance engagement and expresses a conclusion in negative form — stating that nothing has come to attention indicating a material misstatement [Recital 60].
Independent assurance services provider: A conformity assessment body accredited under Regulation (EC) No 765/2008 for the assurance of sustainability reporting, authorised by Member States as an alternative to the statutory auditor [Art. 2(20) as amended].
Value chain: Encompasses the undertaking's own operations, its products and services, its business relationships and its supply chain — sustainability disclosures must cover the whole value chain as applicable [Art. 19a(3) as amended, Recital 33].
Public-interest entity: As defined in Art. 2(1) of Directive 2013/34/EU — primarily entities whose transferable securities are admitted to trading on an EU regulated market, credit institutions and insurance undertakings.

Frequently Asked Questions

What is the difference between the CSRD and the former NFRD?

The CSRD replaces the Non-Financial Reporting Directive (2014/95/EU) by expanding the scope from approximately 11,700 to around 50,000 undertakings, introducing mandatory European Sustainability Reporting Standards (ESRS), requiring limited assurance (moving to reasonable assurance after 2028), mandating digital tagging in ESEF format, and applying the double materiality principle [Art. 19a as amended, Recital 13].

Can a subsidiary be exempted from individual sustainability reporting?

Yes. A subsidiary may be exempted if it is included in the consolidated sustainability report of its parent undertaking, provided the parent reports at group level under ESRS or under equivalent standards. The subsidiary must disclose the parent's name, registered office and weblinks to the consolidated management report. However, large subsidiaries whose securities are listed on an EU regulated market cannot use this exemption [Art. 19a(9)-(10) as amended, Recital 25].

When do listed SMEs have to start reporting?

Listed SMEs (excluding micro-undertakings) must report for financial years starting on or after 1 January 2026. They may opt out for a transitional period of two years, provided they briefly state in their management report why sustainability information is not provided. They may also report under proportionate SME-specific ESRS standards [Art. 19a(6) as amended, Art. 5(2)(c), Recital 21].

Does the CSRD require reasonable or limited assurance?

Initially, only limited assurance is required. The Commission must adopt limited assurance standards by 1 October 2026 and assess feasibility of reasonable assurance for adoption by 1 October 2028. Until reasonable assurance standards are adopted, undertakings may voluntarily opt for a reasonable assurance engagement [Recital 60, Art. 34(1)(aa) as amended].

What must third-country companies report under the CSRD?

Third-country undertakings with more than EUR 150 million net turnover in the EU (raised to EUR 450 million by Omnibus I (EU) 2026/470) for each of the last two consecutive financial years, and which have an EU subsidiary or a branch with more than EUR 40 million (raised to EUR 200 million by Omnibus I) net turnover, must publish a sustainability report through that subsidiary or branch for financial years starting on or after 1 January 2028 [Art. 40a, Art. 5(2) last subparagraph].

What role does the audit committee play under the CSRD?

The audit committee must monitor the sustainability reporting process, inform the administrative or supervisory body of the outcome of the assurance engagement, and explain its contribution to the integrity of sustainability reporting. Member States may allow these functions to be performed by the full board or a dedicated body [Art. 39(6) of Directive 2006/43/EC as amended, Recital 76].

Can sustainability information be published in a separate report outside the management report?

No. The CSRD removes the previous option to publish a separate non-financial statement. Sustainability information must be included in a clearly identifiable dedicated section of the management report [Art. 19a(1) second subparagraph as amended, Recital 57].

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